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The Art and Science of Decision-Making

The Art and Science of Decision-Making. April 21, 2014. Robert S. Duboff Robert.Duboff@hawkpartners.com 617-576-4701. Things You Can Count On??. Analytic Targets: Supply chain Customer selection, loyalty and service Pricing Human capital Product and service quality

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The Art and Science of Decision-Making

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  1. The Art and Science of Decision-Making April 21, 2014 Robert S. Duboff Robert.Duboff@hawkpartners.com 617-576-4701

  2. Things You Can Count On?? • Analytic Targets: • Supply chain • Customer selection, loyalty and service • Pricing • Human capital • Product and service quality • Financial performance • Research and development Source: Competing on Analytics.

  3. Questions to Address Past Present Future What will happen? Using past information to predict forecasts (extrapolation) What’s happening now? Alerts when activity strays away from the norm What happened? Reporting Information How/why did it happen? Modeling, experimental design (e.g., statistical modeling activities explain why and how it happened?) What’s the next best action? Recommendation about what to do right now (e.g., what additional product offering will interest the customer?) What’s the worst/best that can happen? Recommendation about what to do right now (e.g., what additional product offering will interest the customer?) Insight Source: Davenport, Harris and Morison, Analytics at Work, p. 6.

  4. The Parts of a Decision Before Decision Deliberation Decision Post-Decision Advising Making Explaining Implementing

  5. The Art/Science Matrix Think of decision as scientifically-based Think of decision as personality/art-based Valid facts are available and important 1 2 Facts are not available and/or not important 3 4

  6. Why Peter Drucker Distrusted Facts If we do not make opinions clear, we will simply find confirmatory facts. “No one has ever failed to find the facts they are looking for.” An opinion provides an untested hypothesis. Once we have clarified the hypothesis, we can test it rather than argue it. “The effective person…insists that people who voice an opinion also take responsibility for defining what factual findings can be expected and should be looked for.” Decisions are judgments, not a choice between right and wrong. Often times they are “a choice between two courses of action neither of which is probably more right than the other.” Big decisions may requires new criteria. The traditional measurement reflects yesterday’s decision. That there is a need for a new one normally indicates that the measure is no longer relevant. Ironically, opinions break executives free of pre-conception and poor imagination. Drucker quotes the famed General Motors boss Alfred P. Sloan, (http://economist.com/node/13047099) who after hearing executives unanimously support a decision, reportedly said, “I propose we postpone further discussion of this matter until our next meeting to give us time to develop disagreement and perhaps gain some understanding of what the decision is all about.”

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